YNAB’s Business Category Setup in YNAB…Revealed.

“Revealed” is such a hokey marketing word. But I just returned from MicroConf in Vegas and hokey marketing is on the brain.

In working with a lot of small business YNABers over the past little while, I was asked how I (Jesse) have set up YNAB’s (the business) categories in YNAB (the software).

I’ll tell you right now, I’d love to pare them down. It’s a lot easier to do that on the personal side, but still worth the effort either way.

Also, bear in mind that the easiest way to determine your category set up is just to start and see what you need as transactions come up and surprise you.  Another little hack is to scan your bank statements over the last few months and write down potential categories for transactions (especially the larger, less-frequent expenses that you maybe would have forgotten, but now won’t, because Rule Two will be firing on all cylinders).

Without further ado, and perhaps just for inspiration, here is our YNAB Business Category Setup, subject to change on the whimiest of whims.

• Reserve
• Buffer – I keep about two months of revenue in our Buffer, because we follow Rule Four, and then some.
• Revenue – Desktop
• YNAB 3 – about to be retired, since we aren’t selling it at all anymore.
• YNAB 4
• YNAB 4 Upgrades
• Amazon.com – I’m hiding this one right now, because it shouldn’t be there. We don’t sell on Amazon.com anymore.
• Gift Code – If you buy a digital gift code for a friend.
• Amazon Downloads – Holy hannah, here’s another one. Hiding now.
• Guide with Code – for the workbook+redemption code combo.
• Guide with Key – for the workbook+activation key combo.
• Revenue – Mobile
• iPhone – hiding this now. No longer even care to look back and see it.
• Android – and hiding this one too.
• iPad – just kidding. This isn’t even on there, because we’re not done. Also, I announced that the coming iPad app would be free anyway.
• Revenue – Other
• YNAB the Book – monies come from Amazon, where they won’t allow us to list the book for free, but require that it’s $.99. This arrangement is, needless to say, making us rich.
• Coaching – we occasionally coach someone for about a month that really wants one-on-one attention.
• Commissions – we earn commissions from our relationship with Betterment, my favorite way to invest. Oh, and Ting, where several of our team members have saved a lot of money on their cellphone bills.
• SB Consulting – we work with several small businesses, where we do their books for them (in YNAB, of course) and meet with them monthly to do some analysis, strategize cash flow management, etc.

An update 20 minutes after posting: In the comments, I’m receiving questions about “revenue” categories. I use the standard categories, and record inflows to them. That sticks all of the funds into their appropriate product categories. Then, when I’m ready to budget, I suck the funds out of those categories by entering the appropriate negative budget amount to get the revenue categories all at balance:0.  For a more in-depth, older (but still relevant) blog post specifically about this, head here, specifically look at the “How I Made the Transition” section halfway down.

The rest of these categories aren’t as fun, as this is where money starts flowing out, instead of in. (Except for paying our team. I really enjoy doing that.)

• COGS
• Printing & Shipping
• Transaction Fees – fun fact: it took YNAB something like two years to earn in a month what we now pay in fees for processing credit card transactions.
• Product
• Redacted – can’t say. But I do fund it, so when we’re ready, we can spring on it.
• iOS – iPhone and iPad efforts.
• Android – our Android efforts.
• Desktop
• Redacted – sorry…exciting stuff though.
• Design – anything from branding, to UX, to print.
• QA – to make sure we never ever ship a bug. 🙂
• Benefits & (Some) Taxes
• 401k – Employee – when I process payroll, employee contributions withheld from their paychecks and sent to the 401k are paid through this category.
• 401k – Safe Harbor – a fancy name for the three percent that YNAB contributes to the 401k, on behalf of stateside, full-time employees. It vests immediately.
• Health Insurance – I avoid having health insurance be a benefit of employment with YNAB (I think individuals should shop around, employers shouldn’t do this for them), but this line item covers my own personal insurance for my family.
• Workers Compensation – A required outflow when running payroll.
• Payroll Taxes – FICA, half paid by YNAB, and half paid by YNAB’s team.
• Support & Education
• Customer Service – the good people behind every single support email sent our way!
• Teachers – the various voices that come out of your computer, should you do the very, very smart thing, and attend one of our excellent online classes.
• Advertising & Promotion
• Marketing Experiments – I set a goal to fund this category every month with a fixed amount, and have it be dedicated to doing experiments in marketing. So far I cannot come up with any good ideas that require the funds I’m setting aside, but I’m still sticking to my goal.
• PPC – Google, Yahoo!, MSN search ads.
• Referral Fees – fees happily paid to you good people, for sharing YNAB with your friends through our referral system.
• Other – a grab bag of marketing efforts not large enough to merit their own category.
• Blog Mgt & SB Consulting – this really should go somewhere else, because it’s changed quite a bit. It’s Mark’s category.
• Radio – this, so far, has been somewhere between dismal and an absolute failure. I’m in contact with a guy that built his business on radio, and he said he could help me. #holdingOutHope
• Facebook – occasionally we promote a post on Facebook, or run some other kind of ad.
• Systems & Admin
• Hosting, Domains, Software, etc. – this category grows on its own, I swear. Beware the $50 monthly charge for that necessary service, where there are 40 of those services. (I exaggerate only slightly.)
• Supplies – office supplies, one of my favorite categories. Protein powder, bananas, peanut butter, and other less important things, like paper.
• Telephone & Internet – you guessed it.
• Fees – our tax adviser, bank fees for wires and ACHs, the occasional foreign transaction fee, payroll processing fees, etc.
• People – This is for part of the YNAB team that isn’t part of a specific category (me, our COO, our executive assistant…I think that’s it.)
• Office Space – because we love that movie. And because of our rent here at the office. I honestly haven’t seen the movie, which means half of you now hate me.
• Business Development
• Conferences – to attend, or send someone to attend.
• Travel
• Meals & Entertainment
• Team
• Gifts – we give birthday presents, and Christmas presents. And occasionally spontaneous YNAB swag.
• Meetup – Costa Rica in November for every single team member. If you’re going to join the YNAB Team, you’d do well to do it before…the middle of October or so.
• Team Development – funding our monthly book club at the moment, and maybe some team feedback analysis that I’m looking into.

This next (and last) master category is all non-YNAB stuff. This is the last category, because it’s funded last, and only with funds that couldn’t be better used further up the list. Well, except for paying me and Uncle Sam. Those are important.

• Non-YNAB
• Interest – it’s cute how much this is each month.
• Shareholder Distributions – this is where I track money that flows out of the business to me, either as a direct payment, or as an expense that’s not a business expense (like when I bought my dog).
• Quarterlies – I fund this each month, based on profits earned from the prior month, and then pay out the category balance on 4/15, 6/15, 9/15 and 1/15 (of the next year). EVERY SMALL BUSINESS OWNER NEEDS THIS CATEGORY.
• Other Investments – sometimes an interesting investment pops up, and I’ll fund this a little bit so I can jump on the opportunity.
• Real Estate – I put a little bit here, if there’s any left. It goes toward my rental property empire (2). This is a way for me to not keep all of my eggs in one basket (YNAB).
• Betterment – to keep things sane on the personal side of things, I contribute to Betterment directly from the business account. This is basically an owner distribution, but I capture it separately because I care about it enough to do so 🙂 This also means that all of our required “saving” happens with money that never hits our checking account. Which has made it easier for me to give the budgeting reins to Julie.

Reading back through this post, I find 1) that it was fairly therapeutic and 2) quite detailed. For those of you that asked the simple question of, “How does YNAB have its categories set up?” I think you got more than you bargained for 🙂 Happy to answer questions in the comments.